Attack on tax-exempt leasing structure.
Under the proposed regulations, the term of the lease for purposes of determining the applicable recovery period includes any period of time with respect to which a lessee (or a party related to the lessee) retains a financial obligation to make a payment of rent or a payment in the nature of rent (including a payment intended to substitute for rent or to fund or supplement the rental payment of another). Accordingly, the proposed regulation would include the term of any potential replacement lease for purposes of determining the applicable recovery period. Comments have been submitted to Treasury to exclude from the scope of the final regulations transactions using a replacement lease structure when the nature of the economic investment and risks differ from a full payout lease over the longer term.
Pursuant to the proposed regulations, the effective date would be April 20, 1995 (for all leases entered into on or after that date).
From Jay H. Zukerman, Esq., Washington, D.C.
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|Author:||Zukerman, Jay H.|
|Publication:||The Tax Adviser|
|Article Type:||Brief Article|
|Date:||Jan 1, 1996|
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